Moody’s downgrades Ghana’s rating to B3

Moody’s has downgraded Ghana’s sovereign rating to B3 with a negative outlook in its latest release.

Ghana has served notice that the slumping oil prices on the world market have affected government’s budget deficit.

Ghana’s rating has been lowered one step to B3, six levels below investment grade by the ratings agency.

Standard and Poor’s assesses Ghana at an equivalent B-, while Fitch Ratings has it one grade higher, at B.

Moody’s said the key drivers informing its decision are:

1) Deteriorating debt dynamics as reflected by an increasing debt burden due to large fiscal imbalances and a sharp weakening of the country’s national currency, combined with reduced debt affordability stemming from a high cost of funding in the domestic market;

2) Increased government liquidity risks, as the government faces large gross borrowing requirements amid more difficult domestic and external funding conditions.

“The negative outlook reflects further downside risk to the country’s debt dynamics and liquidity pressure in the short-term if the country’s policies fail to successfully contain its fiscal deficit, stabilize its currency and address current impediments to higher economic growth,” Moody’s said.

The move was the second downgrade by Moody’s in less than a year for a nation that is receiving $940 million loan from the International Monetary Fund.